The changing spatial networks of large state–owned enterprises in reform–era China: A company case study

Abstract

In the past two decades China’s transition from a planned economy to a market–oriented economy with enterprise reform – targeting an increase of enterprise autonomy and improvement of productive efficiency – has resulted in many changes in spatial networks of large state–owned enterprises. Detailed data from interviews with China’s largest agricultural machinery company, China First Tractor Group Corporation Ltd, reveal that the density of networks was being strengthened. Except in sales and material supply, networks in management, technology and other types of material linkages were spatially expanding. Behind these changes were many political and economical factors. Personal relationships or guanxi only played a secondary role. State–owned enterprises (SOEs) in China experienced different mechanisms from the chaebols in South Korean and Chinese business in other Asian countries in networks formation and evolution. While the changing patterns of spatial networks in general favoured SOEs, their negative effect of shrinking the market area cannot be ignored.